Euro-Zone Currency Slides as Global Economic Fears Deepen
Posted on 02. Dec, 2008 by admin in Daily Euro Analysis, Euro Currency, Euro Currency News
The EUR extended its decline against the USD and JPY currencies. The European currency fell as low as 117.46 Yen in yesterday’s trading sessions. The EUR also fell against the Dollar as worries of a deepening economic recession in the Euro-Zone led investors to take refuge in Treasury Notes; it decreased almost 0.7% to 1.2608 per EUR. Against the JPY the European currency depreciated on speculation that declines in global manufacturing and stocks will prompt investors to buy back Japan’s currency at the expense of higher-yielding assets.
The poor data coming from the Euro-Zone, as well as the British economy, has removed any doubt among investors that both the European Central Bank (ECB) and the Bank of England (BoE) will cut their Interest Rates on Thursday. The only debate now is over the size of the cuts; with economists generally agreeing that there is a greater risk the central banks will deliver larger cuts than the 50 basis point consensus previously forecast. The Euro-Zone was officially declared as in recession this month following a second quarterly contraction in economic output. Analysts do not see the economy growing again until the third quarter next year, and then only marginally.
Economists speculate that the European policy-makers will lower Interest Rates this week to 2.75% in the Euro-Zone and 2.00% in the U.K. These aggressive rate cuts from the central banks are designed to stem the economic slowdown which will likely ensure that the Dollar and Yen remain the best performing currencies over the coming months.
Euro-Zone Currency Slides as Global Economic Fears Deepen | Euro …
03. Dec, 2008
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